Stocks stumble after inflation report and failed talks between Russia and Ukraine

Stocks fell again after the new inflation report – consumer prices jumped 7.9% in February – as investors hoping for a solution to the Russia-Ukraine conflict were disappointed by the latest round of negotiations, which failed to make progress on a ceasefire.

Key facts

  • Stocks took a hit after the February inflation report: The Dow Jones Industrial Average fell 0.3%, or more than 100 points, while the S&P 500 lost 0.4%, and the Nasdaq Composite, very technical, lost nearly 1%.
  • According to Labor Department data, consumer prices rose 7.9% in the twelve months through February, the fastest pace in four decades, as oil and gas prices rose due to Russia’s invasion of Ukraine.
  • The ongoing conflict severely affected markets and continued on Thursday, as talks between Russian and Ukrainian officials made little progress on issues such as a ceasefire or the creation of humanitarian corridors for the evacuation of civilians.
  • Oil prices, which have jumped in recent weeks amid the ongoing row, rebounded on Thursday after falling more than 10% the day before: A barrel of West Texas Intermediate crude, the US benchmark, is trading at $114, while a barrel of Brent, the global reference, is trading at $114. It trades for around $117.
  • Economists have warned that the impact of higher oil prices will be felt by Americans at the gas pump, as US gasoline prices are already at record levels, hitting a new all-time high of $4.31 a gallon on Thursday, according to AAA data.
  • Meanwhile, e-commerce giant Amazon shares jumped nearly 4% daily after announcing a 20-fold stock split and a $10 billion acquisition, following in the footsteps of Alphabet, the parent company of Google, and other big tech companies that recently split their stakes.
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important quote

“The inflation picture is getting worse, not better,” said John Lear, chief economist at Morning Consult. “While gasoline prices explain much of the story, food and housing prices were also major factors in February.”

what to watch out for

Whether the current conflict between Russia and Ukraine will cause energy prices to continue to rise. Economists recently warned that oil could rise above $150 a barrel, which will only exacerbate higher consumer prices and potentially slow economic growth. With inflation far from over, investors will now look forward to the Federal Reserve’s next monetary policy meeting next week, where the central bank is expected to raise interest rates by 0.25%.

Article translated from the American magazine Forbes – author: Sergey Khlebnikov

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